Waning consumer confidence and worries that the UK is already lined up for a no-deal Brexit have taken a toll on the Pound in recent trade, most notably against the Euro (GBP/EUR). With world leaders meeting in Japan for the G-20 summit, hopes are high that some progress will be seen in terms of global trade. This has the potential to give commodity prices a boost, so commodity currencies such as the Canadian Dollar (GBP/CAD) have already been rallying in anticipation of some good news here.
Boris Backing Britain into a Corner – Pound Exchange Rate Pressured Lower
Senior politicians from Brussels have warned that Boris Johnson’s positioning ahead of the final round of the Conservative Party leadership ballot is risking locking the UK into a no-deal Brexit. Unsurprisingly this news has done little to help the Pound Euro exchange rate (GBP/EUR) with the cross testing fresh five-and-a-half-month lows as a result. With Theresa May not set to leave office for another three-and-a-half weeks, the uncertainty, and potential for further downside pressure on Sterling, is showing no sign of abating any time soon.
Uncertainty Hampering UK Consumer Demand – GBP/USD Finds Support Despite Confidence Data
UK Consumer Confidence data from GfK was published overnight, suggesting that Brexit uncertainty is making the country’s population even more wary of the economic outlook. The headline confidence metric reversed the modest gains seen back in May and a decline in ‘major purchase intentions’ has been flagged as especially worrying. With the growing prospect of an interest rate cut in the US, the Pound continues to find support against the US Dollar (GBP/USD) around recent lows, but this news again helped contribute to overnight losses for Sterling against the Euro (GBP/EUR).
Will G-20 Summit in Japan see US-China Trade Deal?
The G-20 summit in Japan is now underway and interactions between President Trump and President Xi will be closely followed. Optimism that meaningful progress can be made in terms of trade talks remains thin on the ground, with reports suggesting that the US will only accept a deal that is weighted in its own favour. Any further clarification here could serve to drive the US Dollar higher, given its safe-haven status and the fact many emerging market currencies are likely to continue to suffer if this matter can’t be settled soon. The Euro US Dollar exchange rate (EUR/USD) may be holding around three-month highs, but sustaining this could remain something of a challenge.
Why Did it Move? Pound Sterling to Canadian Dollar (GBP/CAD)
The Pound has weakened against the Canadian Dollar (GBP/CAD) in recent days amid hopes that developments may be seen in terms of US-China trade talks. A resolution is seen as being good news for energy prices and with Canada’s status as a commodity currency, rising raw materials prices should be good for the country’s economy. With that in mind, failure for progress to be realised could initiate a quick reversion. The Pound started the week buying around 1.6850 Canadian Dollars and now trades at 1.6595.